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Volatility

TWO MONTHS AWAY FROM THE HOBBY

How volatile are prices in our hobby of Numismatics?

I have been advocating hobbies in general as being and interesting investment area based on an individual’s knowledge on the product he is buying.

Long term pension 401’s planning has become more difficult as also day by day we read about how the markets and individuals used the people’s money and made billions with no recourse to what they did as they acted within the law.

I am interested to hear our members views – I am still super conservative, gold bullion, cash $ and Swiss Francs, a roof over my head and my collecting.

Regards
SwK

www.petitioncrown.com
A collection uploaded on www.petitioncrown.com is a fifty- year love affair with beautiful British coins, medals and Roman brass

Comments

  • pruebaspruebas Posts: 4,302 ✭✭✭✭✭
    I am one of those that believes that a select portfolio of rare coins, in top grade for what they are (finest known, second finest, etc.), carefully bought over a period of years/decades will be a better retirement portfolio than one made up of stocks.

    Someone once told me that they would rather invest in real estate because the transaction cost of coins is too high. But I think portability and not being tied to one region/country/currency is an important part of investing too.

    Cash? Stay away--far away. Inflation is too easy a political tool than taxation and proper governance.

    Gold? Insurance, not an investment.
  • JCMhoustonJCMhouston Posts: 5,306 ✭✭✭
    It is very difficult for collectors to make money in collectibles, except over the long term. I think if you build a collection of nice rare coins you can certainly make money on them over the long term.

    I also want to remind everyone that bubbles do exist in all markets and if you buy at the top of a market bubble it may be 50 years before your "investment" turns positive. In the US coin market think rolls of 50 d nickels, blast white Morgan dollars in the 70's, early commems in the 80's. What these all had in common is that all of the coins are common, none of them are actually rare.

    Personally I think we are starting to see that in some World coins. Most people will disagree and compare world coin prices to US coins and talk about how they still have a long way to go to catch up with the advance in US prices. And I won't argue that World prices are lower than US prices, they have been for many years. But if you see prices going up 25-100% a year, it's probably a market bubble and unsustainable over the medium term.

    Remember how we discussed the Veiled Head Vicky penny (can't remember the exact date) selling on ebay for a huge price a month or two ago. Look at a lot of Vicki coins and the prices seems to have really jumped over the past 12-24 months for relatively common coins. Those price increases are good if you are selling things you have owned for a while, but if you are buying common Vicki pennies for $500-700 (or similar coins from any country) it could be a while before you see a profit.
  • SapyxSapyx Posts: 1,977 ✭✭✭✭✭
    I could probably make a reasonable profit using my knowledge of coin collecting. My problem would be actually cashing in on this knowledge.

    Speculative investors need to be detached from and disinterested in the things they're investing in if they're going to maximise their returns, since they might have to sell them at a moment's notice. They can't afford to let sentiment get in the way of their profits. As a coin collector, I am definitely not disinterested in my coins. I find it impossible to contemplate selling any part of my collection, no matter how much profit is promised me.

    Example: I have a couple of recent Australian issues I was either given as gifts or I was persuaded by a local coin dealer into purchasing at issue price, which have since seen massive price increases. I could reap big profits if I sold them right now. But I can't. Even though I wasn't really keen on acquiring them in the first place, they're in the collection now and they're not leaving, not if I can help it.


    << <i>I am still super conservative, gold bullion, cash $ and Swiss Francs, a roof over my head and my collecting. >>


    I do hope your Swiss francs aren't in the form of banknotes. Swiss banknotes are declared valueless 20 years after they're officially withdrawn; after that, they have collector value only.
    Waste no more time arguing what a good man should be. Be one.
    Roman emperor Marcus Aurelius, "Meditations"

    Apparently I have been awarded one DPOTD. B)
  • pruebaspruebas Posts: 4,302 ✭✭✭✭✭
    JCM, look at those prices in inflation-adjusted dollars (or Sterling or Euros) not absolute dollars. Add in the growing population with a little money to spare looking for a diversion from an increasingly-difficult world, increased distrust in government, and increased distrust in the financial industry. Those are fueling a rise in prices of all collectibles, not just world coins.

    But I agree, US coin over the long term do not look very promising.

    And yes, rare is the key. My definition of a rare coin is one that I could not expect to find in several years of combing bourse floors and auctions--even if money was no object.

    Sapyx, very good points. More to figure into the investing equation.
  • RedTigerRedTiger Posts: 5,608
    What I always say:

    Some collectors do well financially. They tend to share certain traits:
    * a natural eye for coins that they develop with years of training
    * excellent contacts to get access to good coins at good prices
    * superior knowledge of the market
    Maybe 5% or fewer of collectors will have all three of these traits, and that small group will tend to do well financially. Without at least one well above average score in terms of grading skill, access to coins, or market knowledge, a coin collector (vs. a straight bullion person) usually won't do too well financially.

    A much larger group does poorly financially and they share certain traits. They tend not to know much about grading, and don't want to learn. They tend to buy mostly for investment, often buying what is recommended to them by coin sellers without much market knowledge of their own. They often buy from a single source and some pay much more than current fair market price for their coins.
  • pruebaspruebas Posts: 4,302 ✭✭✭✭✭
    If you are talking about a truly rare coin, for arguments sake lets say <10 known, I would argue that it almost makes no difference what you pay for it over the long run.
  • RobPRobP Posts: 483 ✭✭


    << <i>If you are talking about a truly rare coin, for arguments sake lets say <10 known, I would argue that it almost makes no difference what you pay for it over the long run. >>



    They can be seriously rare, but if virtually nobody collects them then the price doesn't move very much from one year to the next - certain key desirable coins excepted. The problem also arises that if it is known there are limited opportunities to acquire a particular variety, then collectors lose patience waiting and move on to more productive pastures. Over the long run you should do ok, but lack of availability tends to restrict the market you are selling into and so unique or nearly so coins can be a real ****** to shift.
  • SwKSwK Posts: 378
    "They can be seriously rare, but if virtually nobody collects them then the price doesn't move very much from one year to the next - certain key desirable coins excepted. The problem also arises that if it is known there are limited opportunities to acquire a particular variety, then collectors lose patience waiting and move on to more productive pastures. Over the long run you should do ok, but lack of availability tends to restrict the market you are selling into and so unique or nearly so coins can be a real ****** to shift." Rob P

    True words

    j
    www.petitioncrown.com

    A collection uploaded on www.petitioncrown.com is a fifty- year love affair with beautiful British coins, medals and Roman brass
  • pruebaspruebas Posts: 4,302 ✭✭✭✭✭
    I think lack or loss of patience occurs a lot less with collectors of world coins than with collectors of US coins. Our coins are simply not available at every local show, so we have learned to have more patience in finding them.

    On the demand side, it is possible to stimulate demand and cause the price to increase. Auction catalogers do it all the time with good descriptions and stories. Writing a book about the coins in question will also serve to stimulate demand. QDB is a master at this which is why he is so successful.
  • RobPRobP Posts: 483 ✭✭
    As regards US v Other World Collectors I think the very fact that you are indulging in something oddball (to the majority) means you are likely to have more patience than average having taken the time to research material that isn't necessarily regularly available on your home turf.

    When it comes to stimulating the market, the best way is to take a very popular field and publish an up to date list of known varieties as has happened with Michael Gouby's publication on UK bronze coinage. Peck set the ball rolling in 1960 with his 1st edition, Freeman expanded on it and Gouby has taken it a step further. Each revision has increased the demand for that denomination. The other alternative is to publish a fairly detailed study of an unpopular denomination or field and this will generate interest too.

    Auction catalogues in the UK would not as a rule cause much market stimulation, but some of the US catalogues have descriptions that frankly are a bit over the top in my opinion. Many of the London sales have notes for the hammered pieces overseen by Tim Webb-Ware who has a wonderful database of most things hammered, but the milled section to a greater extent is left to itself and relies on in-house records. Many British collectors are already familiar with the absolute rarities of milled coinage, but the hammered series is much more diverse and so requires detailed records to be kept. I'm not sure whether the high slab grade dog is wagging the catalogue tail or vice-versa in the US, but the overgrading of hammered coins in particular which are often at odds with the way I and many others see them is I believe the main reason for the prices realised in US sales. I've seen several slabs from Saxon pennies to Charles 1st shillings which have had MS63 or similar on the label, but were in your typical as found ex-hoard condition of gVF - EF and nVF respectively. In this case it is resulting in US sale prices that are probably 50% more than you would expect to pay in the UK for material of comparable rarity and quality, but the question is whether the voluminous notes are only there to draw attention to or justify the big number on the slab.
  • coinkatcoinkat Posts: 22,721 ✭✭✭✭✭
    Interesting comments-

    I agree with JCM-

    The World coin market has experienced some significant prices increases- some can be justified- others have left me scratching my head-

    The reality is that there has to be interest and demand to make prices move upward- further, there really has to be an appreciation for rarity based on both surviving population as well as condition rarity. While the World coin market at times has been characterized as the "Wild West", some individual countries have the appearance of the bubble- 1929 vintage

    Experience the World through Numismatics...it's more than you can imagine.

  • JCMhoustonJCMhouston Posts: 5,306 ✭✭✭
    I have to say that although I agree somewhat on the catalog descriptions I really enjoy reading some of them. I thought the descriptions in the Heritage NYINC auction were superb reading. I know, it's really not about the coin sometimes but I do enjoy the historical perspective and prose. Bruce could easily become my favorite author.
  • WWWWWW Posts: 2,609 ✭✭✭
    JCM, I couldn't agree more (on both of your posts). With respect to coins and intrinsic, long term value,
    I firmly believe that key dates with eye appeal are the only way to go.
    But I would never consider them as investments.
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